Reinventing Government: the 1995 Speeches announcing the Road to Ruin

By William K. Black

Introduction to the “Reinventing Government” movement

Anyone who has worked for a large government or firm knows their tendency to be bureaucratic. Everyone has had the experience of dealing with bureaucratic mentalities, including the volunteer soccer referee who lets power go to his head and becomes an arrogant demigod. Everyone has had to deal with a public clerk or a private insurance company’s claim official who drives one nuts. Working for a federal agency meant that I often had to deal with a bureaucratic personality to get things done. That is why so many of us that have worked for a large government or firm are passionately anti-bureaucratic.

As a federal financial regulator we took actions that logically should have made us the heroes of the Clinton administration’s “reinventing government” movement (led by Vice President Gore). Our reregulation and resupervision of the savings and loan (S&L) industry in the 1980s involved actions that were as innovative and courageous as they were successful. Leaders like Ed Gray and Joe Selby knew they were likely to sacrifice their careers to confront the fraudulent CEOs and their political allies who were driving the second phase of the S&L debacle. The recent crisis, driven by fraudulent “liar’s” loans, makes our success in ending liar’s loans by S&Ls in 1990-1991 all the more remarkable and impressive. We succeeded because we listened to our examiners, the people in the field closest to the facts. While it is far less known, we (the West Region of the Office of Thrift Supervision (OTS)) also reduced a wide range of rules and approval requirements.

The foreword to Bob Stone’s book on the Clinton/Gore reinvention movement (Confessions of a Civil Servant (2002, 2004) was written by Tom Peters. It begins with a quotation from Stone: “‘some people look for things that went wrong and try to fix them. I look for things that went right and try to build on them.’—Bob Stone/ Mr. ReGo/ Energizer-in-Chief.” That is an excellent, albeit incomplete approach. As financial regulators dealing with the S&L debacle we looked for both the things that had gone wrong and the things that went right. We prioritized and addressed both, because it is essential to learn from both our failures and successes. Our regulatory actions are the subject of three scholarly publications by public administration experts who cite them as exemplars of successful public service. Our actions are profiled in Chapter 2 of Professor Riccucci’s book Unsung Heroes (Georgetown U. Press: 1995), Chapter 4 (“The Consummate Professional: Creating Leadership”) of Professor Bowman, et al’s book The Professional Edge (M.E. Sharpe 2004), and Joseph M. Tonon’s article: “The Costs of Speaking Truth to Power: How Professionalism Facilitates Credible Communication” Journal of Public Administration Research and Theory 2008 18(2):275-295. One would expect that “Mr. ReGo” (Gore’s nickname for Reinventing Government), Gore’s lead Reinventor, and a man who claims that his signature approach is to “look for things that went right and try to build on them” would make our actions the centerpiece of his movement. We did not simply make things go “right” – we did so in circumstances where the military (Stone was military) would have called the “correlation of forces” suicidal. We were extorted, sued by the most notorious frauds in our individual capacities for hundreds of millions of dollars, threatened with criminal prosecution, excluded from meetings, secretly investigated by private and agency investigators, had our jurisdiction over notorious frauds removed, and some of us were made unemployed and unemployable. Tonon was correct, the cost of speaking truth to power was high and it took enormous professionalism and dedication to serving the Nation, rather than corporations, to produce so many things that “went right.”

I have not been able to find a word of praise for our efforts in any of the Clinton administration’s “reinvention” documents. An electronic search of Stone’s book found no reference. Stone did not search for examples of regulatory efforts that “went right” – he searched for examples that “went right” and reinforced his dogmas, particularly his insistence that government leaders should not “waste one second going after waste, fraud, and abuse.” The S&L regulatory response would have falsified his central dogmas, so he excluded it. I have been unable to find more than one (bizarre) sentence even mentioning the S&L debacle and its implications for reinventing government in any document prepared by the Reinventors. (This article addresses that sentence below.) If anyone has access to additional discussions of the debacle by the Reinventors I would appreciate being sent a copy.